ESIMeC: Skills Forecasting Masterclass Presentation 1: Introduction to Skills Forecasting and Why Skills Matter Graeme Harrison, Oxford Economics 1 st March 2012
Outline Why skills matter Definition of skills Why skills forecasting matters Which countries undertake skills forecasting Different approaches to skills forecasting Best practice in skills forecasting Limitations of skills forecasting Skills forecasting outputs CEDEFOP skills forecasts for Europe How to make use of skills forecasts in practice
Why skills matter Skills are the 21 st century raw material of advanced economies Globalisation and growing competition from emerging economies advanced economies must compete on skills to stay ahead, cannot compete on costs emergers catching up fast on skills Free movement of labour in Europe countries and regions competing New growth sectors increasingly skills hungry Skills important for economic rebalancing and export-led growth Skills important location factor for inward investment Skills vital for R&D and innovation More highly skilled economies have higher GDP per capita and productivity More highly skilled individuals earn higher wages and are more likely to be employed
Why skills matter economy level
Why skills matter individual level employment probability
Why skills matter individual level wage premiums
Definition of skills Formal qualifications level and subject Soft skills teamwork, management Years of experience Non-accredited workplace skills Attributes that make employees effective and productive in their roles could be linked to all of the above An ability and capacity acquired through deliberate, systematic, and sustained effort to smoothly and adaptively carryout complex activities or job functions involving ideas (cognitive skills), things (technical skills), and/or people (interpersonal skills)
Why skills forecasting matters demand for skills To quantify future skill demands how many jobs, what sectors/occupations, what skill level economies are becoming more diverse, no longer dominated by few industries, skill needs differ significantly by sector To anticipate future skill demands in order to be able to: Meet demand and/or limit the extent of skill shortages and mismatches Avoid missing out on investment or losing existing jobs to other locations due to labour and skill shortages Better align existing supply of skills of education & training systems and unemployed and to inform funding some cities have more difficulty than others attracting skills from outside so local skills supply is more important Better advise young people on career choices Paradox in today s labour market simultaneously have high unemployment and talent gaps / unfilled vacancies why skill mismatches
Why skills forecasting matters supply of skills To anticipate future changes in skills supply to compare to skills demand To anticipate future changes in skills supply to understand demand for places in education & training systems To benchmark skills supply against other geographies To identify where skill interventions (and how much) may be needed to achieve skill supply targets
Which countries undertake skills forecasting Country Australia Austria Canada Cyprus France Data used Census data and sample surveys Census data, national accounts, companies database, micro data of unemployment National census, monthly labour force survey Census and labour force survey Census, labour force survey, national accounts Who compiles the forecasts? Centre of Policy Studies Austrian Academy of Science, Austrian institute for Economic Research, Institute for Advanced Studies Human Resource Development Canada Human Resource Development Authority Ministry of Employment, Ministry of Education, Institute of Economic Forecasting Who uses the forecasts? Australian National Training Authority Low demand for results Federal Government Unknown State and regional governments
Which countries undertake skills forecasting Country Germany Great Britain Japan Netherlands Northern Ireland Data used Labour force survey, national census, micro census, expert interviews Labour force survey, census, employer skills survey, establishment based surveys Census basic survey of employment structure Labour force survey, unemployment survey, school leavers follow up survey Labour force survey, IDBR, employer survey, training data Who compiles the forecasts? Institute For Labour Market and Vocational Research The Institute for Employment and Research Ministry of Labour Research Centre for Education and the Labour Market Priority Skills Unit Who uses the forecasts? Federal and regional governments Government bodies, local authorities, training and enterprise councils Government and social partners Government ministries, individuals and firms for research Department for Employment and Learning, Sector Skills Councils, Ni expert Group on Skills, Career counsellors
Which countries undertake skills forecasting Country Data used Who compiles the forecasts? Who uses the forecasts? Republic of Ireland Labour force survey, Census Economic and Social Research Institute Government and state agencies for planning education and training South Africa Spain Sweden USA Employer survey, Manpower survey, Labour force survey Human Sciences Research Council, Bureau of Market Research, Individual sector studies To date no official forecasts have been produced, to date feasibility demonstrated (2008) Labour force survey, National accounts, unemployment data National Institute of Employment Data collected from questionnaires Mainly Statistics Sweden and National Labour Market Administration Labour force survey, Census Bureau of Labour Statistics Expert groups Unknown Government agencies concerned with training, education or migration. Career councillors, individuals and firms
Different approaches to skills forecasting Need to be clear are we talking about skills demand, skills supply or both? Most skills forecasts refer to demand for skills Approaches to skills demand forecasting Quantitative economy-wide skills forecasting models Detailed sector studies Employer surveys Qualitative consultations with employers and sector experts Desk-based skills literature review
Best practice in skills forecasting Difficult to define best practice Depends on specific situation different approaches suit different situations All approaches undertaken correctly can be best practice The right approach but done badly is not best practice Best practice could be said to be getting the balance right between the different approaches, depending on the situation, and integrating the approaches Best practice about the how and so what usefulness of skill forecasts depends on the information they convey do they answer questions being asked - and how this influences decisions
Limitations of skills forecasting Quantitative economy-wide skills forecasting models data hungry, data not always available or reliable, data not always a true reflection of skill demand, high level and sometimes lacking in specific sector detail Detailed sector studies often lack quantification, undertaken in isolation from rest of economy Employer surveys biased responses, difficult to distinguish between what employers want and need, not all employers have specific skill requirements Qualitative consultations with employers and sector experts often lack quantification, how to ensure a representative sample, also need to consult with tomorrow s employers not just today s employers (but where to find them) Desk-based skills literature review often does not exist or is out of date
Skills forecasting outputs skills demand, supply and balance Skills demand - number of jobs Timing Sector and occupation Skill level Subject Other requirements years of experience, soft skills Skill demand indicators ideally directly comparable to skills supply indicators Skills supply new entrants to labour market, outputs from education & training, skills of unemployed and economically inactive Skill demand-supply balance analysis identification of skill surpluses and deficits Note labour market forecasts also typically part of skill forecasts
CEDEFOP skills forecasts for Europe The European labour market became a reality and required identification of occupations, skills, competences and qualifications, which will be in demand in the future Finding ways to obtain consistent and comprehensive information on future skill demand as well as supply in Europe or even a joint European action was a priority The first pan European forecast of skill demand providing consistent and comprehensive medium-term projections of employment and skill needs across Europe until 2015 and 2020 was published by CEDEFOP in 2008 Further work has been done to produce regular forecasts integrating skills supply and demand Forecasts have become one of many pieces of information that contribute to a more detailed, consistent and plausible picture of the economy
CEDEFOP skills forecasts for Europe A modular approach was used comprising 3 main elements: 1. A multi-sectoral macroeconomic model 2. Occupational and qualifications expansion demand modules 3. Replacement demand module This forecast is based on data from Eurostat sources, adopting common methods and models. This required developing a basic database and tools for a comprehensive and consistent set of skill projections for EU-25+ A key issue for the forecast is use of the best data to measure employment structures in Europe using a common framework
CEDEFOP skills forecasts for Europe
CEDEFOP skills forecasts for Europe
CEDEFOP skills forecasts for Europe
How to make use of skills forecasts in practice Ensure skill forecasts convey useful information to key stakeholders ask stakeholders what information would be useful before designing a tool Think broadly about stakeholders and bring together employers, education & training institutions, employment agencies, students, unemployed effective collaboration is key Share results and engage in discussions incorporate feedback, can improve forecasts and enhance credibility Present key messages will there be skill shortages or surpluses in future? In which sectors? What will the impact be? What should be done different? But warn stakeholders of caveats of skills forecasting not100% accurate Regularly update skill forecasts the economy can change quickly, especially at city level skill forecasts can date quickly; regularly update skills policy messages Track outcomes versus forecasts and learn lessons
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